With online competitors such as Google, Yahoo!, and others making huge advances online and, more important, perhaps, seizing the minds of a coming generation of IT decision makers, it's only a matter of time before Microsoft finally embraces cloud-based computing. This week, the company took the first important (if small) steps toward this future by announcing a new initiative, Microsoft Online, which will do for enterprises what Microsoft Live has done for consumers and small businesses.

Oddly enough, that's almost all we know about this initiative at the moment. You may be familiar with Microsoft's various Live services: There's Windows Live, a collection of products and services aimed at making Windows more valuable. And Xbox Live, which allows Xbox 360 users to compete and cooperate in games online, while also providing downloadable TV shows and movies.

And finally, there's Office Live, which this week was renamed Office Live Small Business to more strongly emote the market Microsoft is trying to reach: Office Live Small Business provides free and low-cost ways for individuals and very small businesses to create Web sites, obtain email, and market to customers. This week, Microsoft extended Office Live Small Business with a beta version of new service, Office Live Workspace, which provides online storage space and a collaboration environment for users of Microsoft's desktop-based office productivity suite. Workspace is free and is perhaps the perfect example of Microsoft's "software + services" strategy. Yes, it's online service, but it's almost useless without a working copy of Microsoft Office.

By dividing its online services work into two distinct initiatives, both of which target very distinct markets, Microsoft is sending a very clear message to the industry: It's finally getting serious about "software + services" and, yes, as the company previously announced, it does intend to make this new type of offering available to its enterprise customers.

In addition to the Microsoft Online name, we also know of three services that Microsoft plans to offer under this brand--Microsoft Exchange Online, Microsoft Office SharePoint Online, and Microsoft Office Communications Online. My guess is that these are simply rebranded versions of products the company was already offering or had in the pipeline. For example, Microsoft Exchange Online is most likely a rebranded Exchange Hosted Services.

Officially, Microsoft is only saying that its "Online" services will involve the software giant hosting company data, user accounts, or business and compliance policy, as was the original plan when it first foisted its plans for its "Hailstorm" initiative a few years back. The Online stuff, from what I can see, is a new alternative that joins current ways to implement Microsoft server technologies. So in addition to self hosting and working with Microsoft partners to service on-site installations, you can now choose to host Microsoft servers through the company's datacenters. Is this an option that will appeal to the traditional enterprise? Maybe not at first, and certainly not for certain applications, but with the increasing complexity inherent in today's environments, even the biggest enterprises will at least want to know more. I'll let you know what I find out.